Home > jobs > Which country has the smallest small-business sector in the world’s rich economies?

Which country has the smallest small-business sector in the world’s rich economies?

from John Schmitt

Back in the summer of 2009, Nathan Lane and I wrote a CEPR report (pdf) documenting something that is surprising to many Americans. The United States has just about the smallest small-business sector in the world’s rich economies.

Our report used OECD data to look at the share of workers in small businesses in each of a variety of industries (manufacturing, computer-related services, research and development, “restaurants, bars, and canteens”, real-estate activities, “renting of machinery and equipment”). These were all of the industry categories for which the OECD had produced comparable data on the employment share by enterprise size. Unfortunately, at that time, the OECD had no numbers for the distribution of employment by enterprise size for the economy as a whole.

But, the OECD’s Entrepreneurship at a Glance 2011 now reports internationally comparable data on total small-business employment for a collection of rich and selected middle-income countries. The first figure below shows

 the share of total national employment in each country in enterprises with one to nine employees. The United States is dead last, with about 11 percent. Germany is at 19 percent; France and Sweden, both 24 percent; Italy, 47 percent. (All three figures here exclude OECD data for Brazil, Ireland, Israel, Japan, Korea, Luxembourg, and the Slovak Republic, where the OECD data cover only those countries’ manufacturing sector.)

Employment in enterprises 1 to 9 employeesSource: OECD.

Using a cutoff of 50 employees for small businesses doesn’t change the picture in any meaningful way.

Employment in enterprises with 1 to 50 employeesSource: OECD.

And, not surprisingly, given the results so far, the United States has the highest share of national employment in large enterprises (those with 250 employees or more).

Employment in enterprises with 250 or more employeesSource: OECD.


  1. Podargus
    September 25, 2011 at 7:40 pm

    The US likes to be known as the Land of the Free.Maybe it was but it appears to be now the Land of the Barons and the Slaves.

    You have plenty of company,though.BTW,what happened to Canada?Have they become the 51st state?

  2. September 26, 2011 at 4:24 am

    I should’a guessed: Reality is inversely proportional to Teabagger propaganda.

    Or: We need need more small-businesses in America, so we can be more like Greece. (This is a joke, just in case you are wondering. The previous quip may be funny – depends on your sense of humor, and mine is sick – but it is a statement of fact.)

  3. merijnknibbe
    September 26, 2011 at 12:33 pm

    This might to an extent indeed explain why neo-liberal ideology, for instance in the case of the ‘flexibility of labor’, stresses policies which enhance the power of mediocre managers to fire and dumb down other employees, to enable these mm’s to hide their mistakes. While it also might, to an extent, explain while ‘American Austrians’ (bwegh, what a phrase) are defending entrepreneurs so furiously. MM’s have become the dominant species in the USA (and the UK) and mediocre neo-liberal economists are defending their peers – by proposing policies which kill thousands upon thousands of small companies but which bail out the large companies and organisations. To take labor flexibility as an instance – we all know that, on average, loyalty to the company, willingness to work overtime, the level of absenteeism and the like is much more favorable in small companies. This kind of real flexibility is thrown away – and neo-liberal bureaucratic flexibility has to take it’s place.

  4. September 26, 2011 at 9:45 pm

    Austrians do not defend entrepreneurs. They defend entrepreneurship. They point out that excessive regulations benefit large firms at the expense of small firms.

    • merijnknibbe
      September 27, 2011 at 8:58 am

      Points taken.

    • Bob
      April 5, 2016 at 6:05 pm

      Cleverly thought out “Excessive Regulations” can protect small businesses against the predations of large businesses crooks and other paracriminal entities/individuals. Those individuals can include Government agencies: Psychopaths are everywhere looking for an easy target and small businesses are easy prey. Guess that explains the USA situation and to a lesser extent that of the UK. A dynamic economy has a big SME sector.

  5. Falstaff
    October 14, 2011 at 3:52 am

    There’s appears to be a serious flaw in the data as reported by the OECD and here by Mr Schmitt. The single person “self-employed” bracket seemed extraordinarily high as reported in the earlier CEPR paper. The OECD questionnaire based polling method for self-employment seems inadequate to draw such conclusions and is apparently unverifiable, unlike the existence of say, twenty person or larger firms. If the self employed count is inaccurate it will skew all of the larger “less than X” firm categories.

    There is at least one method to eliminate the single person firm count, as in addition to the 1-to-X brackets, the OECD data provides closed brackets, i.e. 20-49. As it happens I could only find data including the US for 2004, 2005, and then only for manufacturing firms:

    As before, share of employees, firms 1-19, manufacturing, 2004, which shows the US just as reported in Figure 2 of the original CEPR report at 11%.

    And here, share of employees, firms 20-49, manufacturing, 2005. Suddenly the US jumps up to near the top, double the size by share of Germany.

    Absent explanation, a retraction of the conclusions in the original 2009 CEPR article, and this blog article are in order.

    M. Heslep

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: